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Tussle over Future-Reliance deal likely to shift to Indian courts

FRL, which operates retail chains as Big Bazar, questioned the jurisdiction of the SIAC to give a ruling in the ongoing dispute.

Published: 27th October 2020 12:45 AM  |   Last Updated: 27th October 2020 12:45 AM   |  A+A-

Future Group CEO Kishore Biyani

Future Group CEO Kishore Biyani

Express News Service

NEW DELHI: The potential legal battle with Amazon, which has challenged Kishore Biyani-led Future group over its deal to sell retail assets to Reliance Industries in an arbitration court in Singapore, may now shift to India with rivals likely to approach Indian law courts. On the other hand, Amazon may also approach an Indian court to get the arbitration award enforced.

On Monday, Future Retail Ltd (FRL) said that it is not a party to the agreement under which Amazon has invoked arbitration proceedings in Singapore International Arbitration Centre (SIAC) and added that it would take steps to ensure that its proposed deal to sell group assets worth Rs. 24,713 crore to Reliance proceeds “without any delay”.

“FRL has been legally advised that actions taken by the FRL and its board, which are in full compliance of relevant agreements and in the interest of all stakeholders, cannot be held back in arbitration proceedings initiated under an agreement to which FRL is not a party,” the company said in a regulatory filing.

READ| Future Group shares tank up to 10 per cent after Reliance deal put on hold

FRL, which operates retail chains as Big Bazar, questioned the jurisdiction of the SIAC to give a ruling in the ongoing dispute and said relevant agreements are governed by Indian Law and provisions of Indian Arbitration Act. “Accordingly, this order will have to be tested under the provisions of Indian Arbitration Act in an appropriate forum,” Future Retail said in a statement.

The statement comes after US retail giant Amazon secured an interim relief against the proposed sale between the two Indian retail giants. The Jeff Bezos-led firm alleged that Future’s sale of its retail, wholesale, logistics and warehousing businesses to rival Reliance violated a non-compete clause it had with the Kishore Biyani Group. Amazon had bought 49 per cent stake in a Future Group unlisted entity Future Coupons with first right to more shares.

The interim order is valid for 90 days. Meanwhile, Future Group is likely to move Delhi High Court in a few days challenging the interim order, while Reliance may also challenge the arbitration award from the SIAC before Indian legal forums. Legal experts say that the skirmish over Future's retail assets will now shift to India with Amazon also likely to seek to enforce the arbitration award through a legal order in India as the interim order passed by a single member arbitration panel doesn’t qualify as a judgement and hence, any deal proceedings at this point between FRL and Reliance will not qualify as contempt.

“The best possible scenario for Amazon will be to approach an Indian court soon so that the arbitration award is enforced through the Indian legal route and subsequently any proceedings in the RIL-FRL deal may amount to contempt of the court. As for Reliance, it is obvious that the firm did its due diligence in financial, legal, commercial and operational aspects before going ahead with the proposed deal but since it is also not a party to the arbitration award, it is well within Reliance’s right to go ahead with the deal,” pointed out Neerav Merchant, Partner, Majmudar and Partners.

In a separate statement late Sunday, Reliance Retail Ventures Limited (RRVL) had said it intends to enforce its rights and purchase Future Retail’s assets in terms of the scheme and agreement with Future group “without any delay”.

"RRVL has entered into the transaction for the acquisition of assets and business of Future Retail Limited under proper legal advice and the rights and obligations are fully enforceable under Indian Law. RRVL intends to enforce its rights and complete the transaction in terms of the scheme and agreement with Future group without any delay," the Mukesh Ambani-led company added.
 



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